What is a Trading Floor in India
- 12 Jan 2024
- By: BlinkX Research Team
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On a stock exchange, a trading floor is a bustling environment where traders and brokers buy and sell financial instruments. Floor trading is the place where orders are executed. As well as executing orders, trading floors serve as hubs where traders manage their trading account and adjust their positions in real-time.
Since the Securities and Exchange Board of India switched to electronic trading, floor trading is obsolete. Despite this, floor trading is still at the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE). In this article, let's look at the concept of a trading floor in India, its structure, and the types of traders on the trading floor.
Understanding Trading Floor in India
Trading floors are areas of the stock exchange where securities are bought and sold under an open outcry system. The trading floor meaning refers to a physical place where traders and brokers execute trading orders on behalf of their clients. Stocks, equities, commodities, bonds, derivatives, etc., are traded on the floor trading. The trading floor is also called a front office, dealing room, and trading room.
Additionally, floor trading is called a 'Pit' because they're a circular area, and traders step into it to place orders. In India, the front office is obsolete because the Securities and Exchange Board of India switched to electronic trading. However, there are still dealing rooms at the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).
Table of Content
- Understanding Trading Floor in India
- Types of Traders on the Trading Floor
- Structure of Trading Floor
- How Does the Trading Floor Work?
Types of Traders on the Trading Floor
On floor trading, a variety of traders execute trades. Here are the types of traders:
Structure of Trading Floor
A trading floor is a circular area where many traders and brokers meet to execute trades quickly. This circular area of floor trading is called the Pit. In a front office, all trading orders are conducted inside the pit. Traders may either step into the pit to face outwards or stand on the steps to face inwards.
Each front office has numerous booths assigned to different brokers or brokerage firms. In these booths, traders receive orders from the firm or clients through electronic devices such as telephones or computers. By a messenger, the brokers in the pit receive the orders, which the brokers then execute. For effective decision-making, the front office has multiple devices showing trading information like share price, volume, executed orders, etc.
How Does the Trading Floor Work?
Trading on a trading floor in India entails various processes that ensure seamless and transparent transactions.
Conclusion
In stock exchanges, trading floors are bustling places where traders and brokers execute orders. While front offices have become obsolete because of electronic trading, they still exist on major Indian exchanges such as the NSE and BSE. Moreover, the trading floor in India plays an important role. A wide range of traders are on the floor, including floor brokers, scalpers, position traders, spreaders, hedgers, and specialists. You can explore the online trading app to take leverage of stock trading in India.